Can Berkeley Group shake its housebuilder blues following Friday’s half year results?
It has been a miserable year for the UK’s housing sector, and Berkeley is no exception. Though it may have hit an all-time high of £43.42 in early June, it is now down nearly 23% from its £42.20 opening price, recently striking a 17 month nadir of £32. Berkeley Group (LON:BKGH) now sits at a current trading price of £32.61.
The firm’s most recent update came at the start of September, released ahead of its AGM. The company complained of a ‘market that lacks urgency’, with London and the South East specifically ‘constrained by high transaction costs, restrictive income, multiple limits on mortgage borrowing and prevailing economic uncertainty, accentuated by Brexit.’
So, very gloomy. However, Berkeley did state that, ‘subject to any large land transactions that might arise before 31st October 2018’, it expects its net cash at the half way point to be above the year-end position of £687.3 million. Following on from this it reaffirmed that it was on track to deliver £3.375 billion in pre-tax profit for the 5 years to 30th April 2021, with ‘at least’ £1.575 billion pre-tax profit over the 2 years ending 30th April 2019.
Investors will be after further reassurances of those profit promises on Friday, alongside any Brexit-related forecasts the firm can manage as the UK continues to hurtle towards its EU exit date.
The Berkeley Group Holdings PLC has a consensus rating of ‘Hold’ alongside an average target price of £38.91.
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